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Peyto chairman Don Gray says Open Range Energy is ‘the perfect fit for our company.’ (Larry MacDougall)
Peyto chairman Don Gray says Open Range Energy is ‘the perfect fit for our company.’ (Larry MacDougall)

Peyto sweetens offer for Open Range Add to ...

Peyto Exploration and Development Corp. has raised its all-stock takeover offer for Open Range Energy Corp. to fend off a rival bid.

When Calgary-based Peyto announced its initial offer in early July, it was worth about $1.34 per share.

On Tuesday, Peyto announced it plans to swap 0.0723 of one of its shares for each Open Range one, up from an earlier exchange ratio of 0.0696.

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Based on Peyto’s current share price of $21.29 around mid-day Tuesday, that makes the offer for Open Range worth about $1.54 per share.

The new deal is worth $115-million, plus the assumption of $69.5-million in Open Range debt and $10-million in transaction costs announced earlier.

Open Range shares rose more than 6 per cent to $1.54 on the TSX.

“The increase in the consideration resulted from Open Range having received an unsolicited proposal from a third party,” Peyto said in a statement.

Open Range must now also pay a fee of $8.5-million to Peyto if the deal doesn’t close, up from the earlier non-completion fee of $5-million.

“The team at Open Range has built a very impressive asset over the years. In our 13-year corporate history we have not come across another company that has fit so well with our build-it-yourself model,” said Peyto chairman Don Gray.

Mr. Gray said Open Range is Peyto’s immediate neighbour in the Sundance area of Alberta’s natural gas-rich Deep Basin area.

“We are very confident that our expertise in this area and the obvious geographical synergies between our assets make the combination of Peyto and Open Range the perfect fit.”

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